A Business Encyclopedia


Definition: E-commerce or otherwise known as electronic commerce, alludes to all sort of commercial activities, that are conducted online, by way of electronic processing and data transmission, comprising of text, graphics, audio, video, etc. In other words, e-commerce is a business model; that equips the enterprises or individuals to carry out business through the electronic medium.

E-commerce is an exhaustive trading system that makes use of computer network for carrying out buying and selling of goods, information and/or services.

A website or web portal acts as a platform and facilitates the exchange of merchandise, funds, data, etc.,. It also assist in accomplishing company’s transaction with different parties like customers, infomediaries, market makers and suppliers, electronically.

E-commerce companies mainly compete in the online marketplace, in three fundamental aspects which are:

  • Customer interaction with the web portal.
  • Delivery system
  • Problem-solving ability.

E-commerce companies can be divided into two major categories:

  1. Pure click companies: Pure click companies are those companies which do not have any physical existence, i.e. their presence is only online and that too through a website. There are end number of pure-click companies which include: search engines, content sites, commerce sites, transaction sites and so forth. E.g.,, etc.
  2. Brick and Click companies: The enterprises that are present both physically and electronically, are brick and click companies. It includes all those companies which are already existing and added an online site to provide information to the target audience.

The website acts as an interface between the company and consumer, and so the setting up and operation of the website, should be done with great care, as customers are the king in every business, no matter how it is conducted, online or offline.

Classification of E-commerce

The traditional e-commerce business models, which are based on the constituents involved in the transaction, are classified as under:

  1. Business to Business (B2B): When the business transaction takes place between two business houses online, it is known as B2B e-commerce. Such transactions are accomplished with the help of Electronic Data Interchange (EDI). E.g.
  2. Business to Consumer (B2C): B2C is the most important business model, that has enterprises on one end and consumers on the other. The best example of it would be online shopping, facilitated by,, and so on.
  3. Consumer to Business: The business model, in which the value creation is performed by the consumer and the business, being the other party to transaction consumes it. In this e-commerce model, the reverse pricing model is used, wherein the customer ascertains the price of the merchandise.
  4. Customer to Customer: Last but not the least, in C2C model, the commercial transactions, takes place between two consumers electronically. Basically, it uses auction-style model. One of the examples of such model is

E-commerce firms should provide a convenient, pleasurable experience, to their customers, by providing better and faster services. Further, the most important thing remains the security and privacy of online transactions, which should be maintained.

Benefits of E-commerce

  • E-commerce is equipped with a number of advantages which includes:
  • Reach to worldwide customers
  • Lower cost of transaction and greater profit margin
  • Fast delivery
  • 24X7X365 working
  • Wider choice
  • Saving of time and effort.
  • Direct contact between business and consumer

Apart from these benefits, e-commerce also provides shopping convenience to their customers, i.e. they can shop from home, office or any other place. They do not need to stand in queues and wait for the salesman response.

Further, whenever a new product is introduced, customers get the relevant information through the internet.

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